The Feds' Fantasy Statistics

Every time government figures on unemployment, inflation and job creation are released, the phrase "economics disfigured," instead of "economic figures," pops into my head. Government data bear so little resemblance to reality, one wonders where they come from. An article in the May issue of Harper's magazine (harpers.org) sheds light on why these figures seem so out of whack.

Author and former Nixon appointee Kevin Phillips compiles a long list of government manipulation of economic data starting some four decades ago. Each re-calculation made slowly over time, he reports, was created to falsely boost economic indicators. These manipulations date back to the Kennedy administration. Most notably, Phillips describes that President Johnson masked deficits, that President Nixon hid inflation by excluding "volatile" food and energy costs from the consumer price index, and that the Clinton administration expunged many long-term, so-called discouraged unemployed Americans from the unemployment rate, by counting persons who'd been seeking jobs for only a year or less.

My personal favorite example of government fiddling comes in the arena of job growth. The Labor Department website this past December defined new jobs as: "the total number of persons on establishment payrolls employed full or part time who received pay for any part of the pay period that includes the 12th day of the month. Temporary and intermittent employees are included, as are any workers who are on paid sick leave, on paid holiday, or who work during only part of the specified pay period."

If someone "temps" as a receptionist for a day, that is counted as a new job. Short-term or hourly work certainly doesn't fulfill most Americans' vision of what constitutes a job. We think of jobs as full-time employment with benefits—or, at a minimum, some benefits and a guarantee of employment for the foreseeable future.

Since coming upon this contorted definition, I find myself amazed each time "new jobs" figures are released. Counting a temporary or part-time position as a "new job" is sad to the point of being pathetic.

Current figures show inflation running in the low single digits.

By Phillips's calculations, realistic government data would reveal the unemployment rate to be between 9 and 12 percent, inflation at "7 or even 10 percent," and growth since the 2001 recession modest at best, with a recession already upon us once again. His figures jibe much better with reality than those released to us by Uncle Sam. No wonder a Gallup Poll late last year cited by Phillips shows public faith in the federal government sinking "below even post-Watergate levels." Whether statistical deceit is dampening public faith in government is unclear from the Gallup Poll numbers. But from where I sit, it's quite clear. Between WMD that don't exist and economic data that feel off-kilter, no wonder we're losing faith.